Among the biggest challenges in a high-mix environment is that production needs may swing 50% from one day to the next, says Dorner Manufacturing CEO Terry Schadeberg.

Looking Low and High for Lean

Oct. 16, 2018
A common misperception about lean is that it doesn't work in low-volume, high-mix manufacturing environments. Don't believe it. We'll show you why.

Lean is a management philosophy rife with misconceptions: Its goal is workforce reduction. It’s useful only on the manufacturing floor. It eschews technology as a tool for improvement.

None of these statements is accurate, yet they all endure. Perhaps the most persistent misconception of all, however, is that lean has no place in a high-mix, low-volume manufacturing environment. It’s meant for long, highly repetitive production runs, and used anywhere else it is doomed to fail.

That belief is wrong, too, experts say.

“This is a myth grown from failed attempts and word-of-mouth stories over the years that some now take as fact.  Nothing could be further from the truth,” says Larry Fast, a veteran of 35-plus years in manufacturing and author of The 12 Principles of Manufacturing Excellence. “Continuous improvement by any name starts with the mindset that there’s always a better way, and our jobs as leaders are to find it.  No excuses.”

Moreover, lean’s roots are in high-mix, low-volume production, points out Fernando Assens, CEO of Argo Consulting. As evidence, Assens cites Taiichi Ohno, who is considered the founding father of the Toyota Production System, from which lean evolved.

In his book, Toyota Production System: Beyond Large-Scale Production (English translation), Ohno wrote: “The Toyota production system evolved out of need. Certain restrictions in the marketplace required the production of small quantities of many varieties under conditions of low demand … These restrictions served as a touchstone to test whether Japanese car manufacturers could establish themselves and survive in competition with the mass production and mass sales systems of an industry already established in Europe and the United States.”

So why does the myth persist that lean in a low-volume, high-mix environment isn’t meant to be? Assens has a theory. He notes that in the United States, lean implementations were first embraced by high-volume automotive producers, so they are whom other manufacturers looked to when developing their own lean deployments.

“The way (lean) is implemented in that environment is actually very different than the way you would implement it in a high-mix, low-volume manufacturer,” the Argo CEO says, citing quick changeover as one simple example.  An emphasis on quick changeover—the ability to quickly convert from running one product to another—is essential for a manufacturer that has a highly variable mix of product. It’s less important for manufacturers that have long runs of the same product.

In truth, lean was never meant to be a one-size-fits-all solution for process improvement. While the lean principles of improving flow, reducing waste and building greater consistency are universal, the means to get there will vary.

Nevertheless, there are rules of thumb to help improve the opportunity for lean success among low-volume, high-mix manufacturers, as well as lessons to be learned from such companies traveling the lean path. IndustryWeek spoke with several low-volume, high-mix manufacturers engaged in lean manufacturing, as well as lean consultants, to capture their lean ups and downs, their advice and their cautions. 

A Lean Refresh

Dorner Manufacturing Corp. has recently undertaken a lean refresh, with assistance from Argo Consulting. The low-volume, high-mix company, which manufactures industrial, precision and sanitary conveyor systems, has been on a significant growth mode in recent years. It produces approximately 20,000 conveyor systems annually and gives customers a nearly infinite number of conveyor system combinations to choose from.

“I believe very strongly that the lean principles can and do apply in every business,” says Dorner CEO Terry Schadeberg. “It’s about continuous improvement and finding the means and the vehicles to make that happen.”

Dorner’s lean refresh was no small thing. The company reconfigured the entire manufacturing process at its Hartland, Wisconsin, location. Bolstered by quick changeover techniques and a kitting process for components, manufacturing flow improved, output increased and the manufacturer freed up nearly 20% of its workspace for future expansion. “We got an immediate lift in the capacity of our facility and our equipment,” Schadeberg says.

Lean actions taken away from the manufacturing floor contributed to the improved flow as well and included addressing bottlenecks in Dorner’s engineering release process.

However, Schadeberg says the most significant action taken in the facility was the introduction of performance boards in each work area. The team uses the boards to track performance against goal, to review obstacles that prevent goal achievement and to develop action steps to remove those obstacles.

While such actions may seem typical to a lean setting, Schadeberg says establishing daily and hourly goals is challenging in a high-mix environment. No two conveyor builds are the same, so how do you set goals? Dorner has answered that question by taking its manufacturing process and breaking it into subsets, each with a time element attached. So, for example, the manufacturer knows it takes X minutes to assemble Option A, Y minutes to assemble Option B, Z minutes to machine a part, and so on.

The dynamic nature of a high-mix environment adds to the value of having those numbers, Schadeberg says. “You may have a 50% swing in production needs, capacity needs, from one day to the next, one month to the next, and so you have to have a workforce that is well-trained, that you can slide people back and forth, very quickly, almost on a dynamic basis. It’s those [engineering] standards that allow you to do that.”

Not just the standards, however. Schadeberg’ comment hints at what Argo’s Assens identifies as another key to lean success in a low-volume, high-mix environment: cross-trained employees. You want to be able to move workers where you need them in highly variable environments, Assens says. If your employees specialize in a single skill, you run the risk of having the wrong skill available at the wrong time. 

Let’s Talk Strategy Deployment at Lucas-Milhaupt

Over at Lucas-Milhaupt Inc., lean is everywhere.  “We try to do it from top to bottom,” explains Jeff Allen, vice president of operations for the producer of metal joining alloys. Lucas-Milhaupt is a Handy & Harman company and follows the company’s Steel Business System, which is underpinned by lean.

“We have a lean cadence on our policy deployment that comes out every year, so we have processes that start at the very top of the business," Allen explains, "and we flow that all the way down to the shop floor, all the way down to KPIs, all the way down to how we do CapEx, what do we spend our money on, what do we want to change in our business.” The process, which encompasses strategic planning, drives alignment across the business.

Like Argo Consulting’s Assens, Jeff Allen sees no contradiction in deploying lean in a low-volume, high-mix manufacturing environment. Who wouldn’t want to minimize waste, the very essence of lean? Allen asks.

The Lucas-Milhaupt vice president promotes the idea that every lean tool has applicability to low-volume, high-mix manufacturing. It’s just a matter of degree. For example, his company uses pull systems, but only for certain products that move quickly. He develops standard work but not to the same detail or with the same focus that he did in a previous position in the automotive industry.

And despite acknowledging that his work day rarely repeats, Allen is a proponent of standardizing as much as possible “without adding waste.” Lucas-Milhaupt, for example, has standardized its order entry process.

Where has Lucas-Milhaupt’s embrace of lean taken it? It has helped the company improve its on-time delivery and strengthened its ability to address problems. “And at the top level, if we weren’t doing [policy deployment] and all the pieces that go with it, we could have people going a hundred different directions because we have the ability to make thousands, if not hundreds of thousands of different styles of parts,” Allen says. With policy deployment, “we all get funneled in the same direction.” 

Don’t Expect Easy

That’s not to say implementing lean in a low-volume, high-mix manufacturing environment is easy.

“If anyone tells you ‘implement this stuff and it works right away,’ they are lying to you,” says Dorner’s Schadeberg. “Your natural reaction is going to be to go back to how you were doing things before because you actually end up taking a step backwards as you try to go forwards.” Stick it out, he says, because lean works.

Sustaining lean’s gains have always been a challenge as well, regardless of whether the environment is repetitive manufacturing, low mix or even off the manufacturing floor. Chicago-based Freedman Seating Co. has felt that pinch. “Sustaining [gains] and not slipping back is a challenge,” says Craig Freedman, CEO of Freedman Seating. His company, which manufactures seating primarily for the bus market, worked with Argo Consulting to help drive process improvement around its heavy-duty transit bus business, a small but growing piece of Freedman’s operations. It is also much more complex than the company’s higher-volume seat business for the small to midsize bus market. “We were struggling to manage the complexity,” the CEO says.

Freedman says the process improvement initiative at his company included taking apart and reassessing every process (metalworking, welding and final assembly) that comprises the manufacturer’s build process for the heavy-duty transit bus seating. Multiple kaizen events provided both immediate improvements and helped the company develop a list of additional projects to tackle.

The lean effort delivered. Freedman says his company had been building slightly more than 10 seat sets a day in the heavy-duty transit bus business at the time the lean engagement began. “Today our throughput is roughly 15 a day. That’s a 50% increase in output.”

Still, Freedman believes sustaining gains is more challenging in the high-mix environment of Freedman’s heavy-duty transit bus business than it is in the manufacturer’s less-customized, higher-volume small and midsized buses business. That’s because the higher-volume business is less variable, he says. In the transit business, “everything changes on a daily basis. It really requires constant oversight, and diligence and dedication.”

Ultimately, these three manufacturers have found measures of success with lean in their low-volume, high-mix manufacturing environments, and their efforts are ongoing. Their tactics, tool and strategies vary, however, which in Assens’ view is how it should be.

“There are so many people who have their own version of lean," he says. "What’s important is not so much the tools and how the companies have done it. What’s important is to understand the original philosophy and why lean was created and then to be able to translate these into your existing situation.”

Remember, that’s what Toyota did.

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